Ketan Parekh still 'active' in market, ramping up stocks: IB report

MUMBAI: Dalal Street never believed that Ketan Parekh , widely referred to as KP, left the market. And now a 'secret' report by the Intelligence Bureau appears to confirm the fact.

According to the report, 'KP' has been ramping up different stocks and placing some of them at inflated prices to large institutions, like LIC, through little-known investment entities, market operators and a string of loyal brokers.

He is said to have been instrumental in ramping up the share price of SKS Microfinance from Rs 850 to Rs 1,100 soon after its listing in August, the report claims. Also, in collusion with Kolkata-based associates, KP is said to have rigged IPOs of little known companies by buying out 50% of the issue . The report did not identify the sources of its information. Its authenticity was confirmed by people familar with it.

The Intellegence Bureau, which traces its origin to the British Raj, and is in charge of intelligence related to internal security . In the recent past, with the liberalisation of the Indian economy, it has started monitoring the capital market. In a case involving share placements, one Raju Bartar is said to have identified two foreign institutional investors for a qualified institutional placement in Edserv. The understanding, according to the IB report, that the promoter would later return the amount to Bartar, and proceeds from the sale of shares would be shared.

Subsequently, around 50% of the issue was placed with Sparrow India Fund, the report added. A senior official of Edserv denied links to any Raju Bartar, saying that the QIP was done in accordance with Sebi regulations. ET was not able to obtain any phone numbers or email of Mr Bartar.

The report doesn't claim there was anything illegal in Sparrow picking 50% of the issue. The report alleges that Mumbai-based proprietary investor Sanjay Dangi colluded with the promoter of Welspun Corporation to ramp up the stock price, and that Dangi, along with the promoter of a domestic broking firm and a foreign fund, were trying to "inflate" the prices and get the Life Insurance Corporation to buy the stock at higher levels.

Dangi is also said to have been active in shares of Prakash Steelage, Amar Remedies , Sahyadri Industries, Core Projects and Panasonic Home Appliances. Mr Dangi denied allegations of stock price rigging and that he had placed the shares of Welspun Corporation with institutional investors "in the normal course of business" . Welspun, too, denied the charge.

"We strongly deny any direct or indirect involvement in any price manipulation that has been alleged. Welspun group is based on strong ethical practices and sincerely practises transparency in all its operations," the company said in an email response. Also under the scanner of the IB slueths is a person referred to as Marwah, who was earlier pulled up by Sebi in 2007 for allegedly rigging the share price of Atlanta.

According to the Intelligence Bureau report, Marwah "orchestrated arrangements with Ind-Swift Laboratories and Surya Pharmaceutical" by buying shares through front entities. He is also said to have stuck a deal with the promoters of Symphony.

The report claims that former BSE president Anand Rathi was in contact with Vimal Shah, MD of Ackruti City in connection with funds to hike the share price to . 700. The report also alleged irregularities in the equity issue of Gokul Refoil. Anand Rathi Financial Services says it conducted itself in a professional manner.

"This is on record that Anand Rathi Financial Services was retained by Ackruti City for placement of equity shares with qualified institutional investors at a price agreed between them and the investors. We have also acted as merchant bankers with the public issue of equity shares of Gokul Refoil.

Both these assignments have been carried out in our professional capacity as per clients' written mandate and in compliance of the regulatory requirements. The other allegations made in the stated mail are not correct and we deny the same."